MOP 6.00 Vitor Quintã Deputy editor-in-chief Editor-in-chief Tiago Azevedo Number 460 Wednesday January 22, 2014 Year II
Year of Horse no rein on casino bets
Inflation slows but food costs outpace index
April 19, 2013
1 Page 2
Holiday rooms cost more than Japan, Las Vegas Page 3
Electricity supplier to keep consumer’s current subsidies Page 7
I
nflation slowed a little last month, Statistics and Census Service data show. The annual rate of consumer price inflation was 5.72 percent in December, the slowest for four months. The average annual rate of food and non-alcoholic drink price inflation was 6.63 percent for the whole of last year, aided in part by the appreciation of China’s currency the yuan or renminbi, against the U.S. dollar. The pataca is indirectly pegged to the latter. “As long as the renminbi keeps appreciating, there will be price pressures on the food section of the consumer price index, especially when the import scheme is heavily regulated and there are no signs of policy loosening or liberalising,” economist José I. Duarte told Business Daily. More on page 3
www.macaubusinessdaily.com
Brought to you by
15,000 flats for permanent residents in next 5 years: union
Hang Seng Index 23135
The government should reserve at least 15,000 flats for Macau permanent residents in the next five years, says one of the city’s largest community groups. The General Union for Neighbourhood Associations of Macau, commonly known by its Cantonese name Kai Fong, says the price of such homes should be capped at 3,000 patacas (US$375.60) a square foot. In November Macau homes cost on average 7,930 patacas a square foot.
23111
23087
23063
23039
Page 2 23015
Bangkok emergency as Macau flights cancelled Thailand’s government last night announced a 60-day emergency in Bangkok and surrounding provinces. The news came hours after budget airline THAI Smile cancelled two return flights yesterday between Macau International Airport and Bangkok’s Suvarnabhumi Airport. The airline did the same thing on Monday. AirAsia Bhd and local flag carrier Air Macau Co Ltd have also seen the ongoing anti-government protests in Bangkok hit the airlines’ bookings in December and January.
Junket commission war boosts ‘side-wagering’: suggests analyst A possible price war between Macau’s VIP gambling promoters – on commissions paid to the agents that bring in high rollers – could increase the prevalence of “sidewagering” in the city’s junket rooms, says an analyst. David Bain of independent brokerage Sterne Agee in the United States, cites three independent sources. A November report to the U.S. Congress said Macau’s gambling market could be six times the official size. Page 4
Page 6
January 21
HSI - Movers Name
%Day
CHINA PETROLEU-H
4.08
CHINA CONST BA-H
2.97
LENOVO GROUP LTD
2.75
IND & COMM BK-H
2.72
WANT WANT CHINA
2.67
HONG KG CHINA GS
-0.47
SANDS CHINA LTD
-1.30
HUTCHISON WHAMPO
-1.32
GALAXY ENTERTAIN
-1.57
CNOOC LTD
-6.30
Source: Bloomberg
I SSN 2226-8294
Brought to you by
2014-1-22
9˚ 15˚
2014-1-23
2014-1-24
10˚ 15˚
12˚ 18˚
22
January 22, 2014 April 19, 2013
Macau
The Kai Fong says developers can still make a profit on building reserved housing
Kai Fong calls for 15,000 flats in reserved housing The General Union for Neighbourhood Associations says housing reserved for permanent residents should cost no more than 3,000 patacas a square foot
reclaimed from the sea to be used for public housing and reserved housing. The group says the maximum price it suggests for reserved housing can still give developers “a reasonable profit range between 15 percent and 25 percent”. Mr Loi, citing figures supplied by certain construction companies, said the land premium was now just over 1,000 patacas per square foot and construction costs were 1,100 patacas to 1,200 patacas per square foot. Asked if the price cap the Kai Fong suggests was feasible, Mr Loi said: “It depends on whether the developers can accept earning only several hundred thousand patacas instead of the dozens of millions they usually get.” The Kai Fong suggests that flats in reserved housing should have between 400 square feet and 800 square feet of floor space, making the maximum cost of a home between 1.2 million patacas and 2.4 million patacas, assuming the price cap it suggests is accepted. The convenor of the Kai Fong’s housing concern group, Leong Kuai Peng, said the arrangements it suggested could offer permanent residents an upmarket alternative to public housing. The Kai Fong says the “Macau land for Macau people” principle can also be applied to commercial property, but has not said how. Kai Fong said it has already submitted its opinions to the government.
Tony Lai
tony.lai@macaubusinessdaily.com
T
he government should reserve at least 15,000 flats for Macau permanent residents over the next five years, one of the city’s biggest pressure groups says. The General Union for Neighbourhood Associations of Macau, or Kai Fong, says the price of such housing should be capped at 3,000 patacas (US$375.6) a square foot. The average price of housing was 7,930 patacas a square foot in November, official data show. The Kai Fong held a press conference yesterday to voice its opinions on the government’s plans for putting the slogan “Macau land for Macau people” into action by
reserving housing in some areas for sale only to permanent residents. Kai Fong council member Andy Loi Man Keong said: “We came up with 3,000 flats a year on the basis of data showing there were over 3,000 newlyweds in the first three quarters of 2013.” Mr Loi said the purpose of reserved housing should be to solve the accommodation problems of young couples and the sandwich class caused by the rise in housing prices. “This figure of 3,000 flats can still be adjusted to strike a better balance between private flats and flats in public housing”. The University of Macau and the
Macao Polytechnic Institute both said last month they did not expect a large number of reserved flats to be built because the city lacked enough land to build them on. The government commissioned the two institutions to study how best to reserve housing for permanent residents. The government will begin soliciting public opinion on the options for its reserved housing scheme before the end of March. The report on the University of Macau’s study says the city has over 200,000 flats, but only 40,000 in public housing. The Kai Fong is calling for over 80 percent of the five areas of land being
Year of Horse no rein on casino bets February should also benefit from carry over of Lunar New Year festivities say analysts Michael Grimes
michael.grimes@macaubusinessdaily.com
M
acau gaming revenue for January is expected to grow by at least 17 percent year-on-year, boosted in part by the festivities to mark the Year of the Horse, according to three analysts. “The gaming sector has had a great run since July 13. The magnitude and speed for the rally is above our expectation,” wrote Kenneth Fong of JP Morgan, based in Hong Kong. The bank says that based on industry checks and the month’s trend up to and including Sunday,
January 19, the month should close out at 31.5 billion patacas (US$3.94 billion) in gross revenue. “If we assume average daily revenue for the rest of the month at 960 million patacas, considering a slowdown in the run rate towards Chinese New Year holiday (starting from January 31 this year for mainland China), then January should end at around 31.5 billion patacas, or 17 percent year-on-year growth,” wrote Mr Fong. John Kempf of Canada’s RBC Capital Markets, said the upward
sequential trend seen in Macau casino business last week was a pleasant surprise. “The increase was somewhat surprising given our belief that the rate would decline leading into the Chinese New Year holiday, which begins on January 31,” wrote the analyst. He estimated gaming revenue for the seven days to January 19 had risen by 7.2 percent week-on-week to 1.1 billion patacas. David Bain, a senior analyst at Sterne Agee in the United States,
It depends on whether the developers can accept earning only several hundred thousand patacas instead of the dozens of millions they usually get Andy Loi Man Keong, Kai Fong council member
described the Lunar New Year holiday period as “a mass-driven event” that could help deliver year-on-year gains for February of at least 20 percent year-on-year. That’s thanks to the carry over of the festivities. Some like for like comparison is possible, because in 2013, Lunar New Year fell on February 10. Chinese-language media last week reported that the Guangdong government would soon introduce a new smartcard-format visa for independent travellers from the mainland to Macau. It would allow permit holders to use the electronic barriers at immigration checkpoints and in both directions. That could speed the flow of travellers said reports quoting a Macau delegate to China’s National People’s Congress. “We believe mid-year 2013 capacity increases at Macau’s Gongbei border, as well as the lack of [end to] distraction from last year’s mainland China leadership handover (officially concluded March 2013) will be helpful to February results,” wrote Sterne Agee’s Mr Bain.
33
January 2014 April 19,22, 2013
Macau
Inflation decelerates slightly in December Food prices, the cost of eating out and the cost of housing were the main drivers of inflation Tiago Azevedo
tiago.azevedo@macaubusinessdaily.com
I
nflation slowed a little last month, Statistics and Census Service data show. The annual rate of consumer price inflation was 5.72 percent in December, the slowest for four months. Usually, inflation accelerates towards the end of each year. Annual inflation was 5.78 percent in November and 6.18 percent in October. The monthly rate of consumer price inflation was 0.79 percent last month, having been 0.52 percent in November. The average annual rate of inflation was 5.5 percent last year, having been 6.11 percent in 2012. Inflation has been hovering around 6 percent since 2011. “Inflation was mainly fuelled by higher rentals for dwellings and rising charges for eating out, which drove up the inflation rate by 3.8 percentage points,” the Statistics and Census Service said in a written statement issued yesterday. It added: “The electricity charge subsidy tapered off part of the increase.” The government subsidises the electricity consumed by households at the rate of 200 patacas (US$25) a month each.
KEY POINTS Annual inflation 5.72 pct in December Slowest rate for four months Food, drink price inflation 6.44 pct Average inflation 5.5 pct in 2013
Consumer price inflation remained below 6 percent last year
The inflation rate for 2013 “is within what was expected taking into consideration the monthly figures,” said economist José I. Duarte. “The annual inflation rate has been stable at about 5.5-6.5 percent in the past few years,” he said. Food prices, the cost of meals in restaurants and the cost of housing were the biggest drivers of inflation. The annual rate of food and nonalcoholic drink price inflation was 6.44 percent, having been 6.48 percent in November. The average annual rate of food and non-alcoholic drink price inflation was 6.63 percent last year. Food and non-alcoholic drink is the biggest single expense for Macau households. The annual rate of housing cost inflation, including mortgage costs, was 10.78 percent. The average annual rate of housing cost inflation, the second-biggest single expense for households, was 9.95 percent last year. Home rents surged even faster in 2013, growing on average 14.91 percent. Secretary for Economy and
Finance Francis Tam Pak Yuen said in November that tourist spending and housing costs accounted for 70 percent of consumer price inflation. But Mr Duarte said the government should revise the way it compiles the market basket. “The current market basket – as it was defined five years ago – probably does not reflect the real increase in prices, especially regarding housing prices,” he said. “The way the data are compiled should be updated and, given the rapid economic growth we have here, probably it should be done more often than every five years,” said Mr Duarte, criticising the mashing up of housing and fuels consumption as one index. Sluggish economic growth in the mainland, Macau’s biggest trading partner and supplier of food, probably curbed food and drink price inflation here. The mainland’s annual rate of consumer price inflation slowed abruptly last month to 2.5 percent, the slowest for seven months. Food price inflation in the mainland was 4.1 percent.
Holiday rooms cost more than Japan, Las Vegas Even Beijing’s man in Macau acknowledges supply challenges of local tourism industry
N
ightly rates for three-star hotel rooms leapt 8.29 percent year-on-year in 2013 according to unofficial data from the Macau Hotel Association. They cost on average 1,143 patacas (US$143). That’s 18 percent more than the 972 patacas average cost of a four-star room during the same period. But much higher year-on-year surges in all categories have been reported for peak Chinese holiday times. Aside from the usual seasonal fluctuations related to ‘natural’
supply and demand, there have been unconfirmed reports from the local travel industry that some agents make block bookings for peak times with the aim of re-selling hotel rooms at a premium. Average hotel room prices in Macau are HK$4,000 or US$516 per night for this year’s Lunar New Year period – higher than a five-star hotel room rate in Japan over the same period, reported Chinese-language newspaper Apple Daily in Hong Kong this week, citing its own survey. T
he average nightly five-star rate for Macau in 2013 was 1,732 patacas – 138 percent cheaper – according to the Macau Hotel Association, which has 41 venues on its membership list. In October Business Daily reported that during the start of the Golden Week break straddling China’s National Day holiday, the cheapest deluxe five-star room on Cotai was 5,888 patacas according to Macau Government Tourist Office. That was two-and-half-times the cheapest rate quoted on tripadvisor.
The mainland’s average annual rate of inflation was 2.6 percent last year, slower than the 3.5 percent the government had hoped not to exceed. Economists have given warnings that inflation in Macau may accelerate in the coming months as the central government endeavours to let market forces play a greater part in the mainland economy. Seasonal influences like the Lunar New Year may also increase prices, as food and beverages is the biggest contributor to the overall rise in the price index. “A rise in prices is expected as a result of the appreciation of the renminbi,” Mr Duarte said. “As long as the renminbi keeps appreciating, there will be price pressures on the food section of the consumer price index, especially when the import scheme is heavily regulated and there are no signs of policy loosening or liberalising,” he added. The Bank of China Macau Youth Association said last month it expected the annual average rate of consumer price inflation to be about 5.05 percent this year.
Source: Statistics and Census Service
com for a night at Encore at Wynn Las Vegas during November’s Thanksgiving holiday in the United States. According to the World Bank, in 2012 the per capita gross domestic product of the U.S. (US$49,965) was eight times greater than that of mainland China (US$6,188). Supply and demand is a yearround factor in the Macau hotel market. Around 270 million Chinese people – about a fifth of the mainland population – are eligible under China’s Individual Visit Scheme to come to Macau. The city presently has only about 22,000 hotel rooms. The issue was even mentioned last week by Li Gang, the central government’s new chief representative in Macau. “There are currently about 22,000 hotel rooms in Macau only, but in Las Vegas they have six times the hotel rooms than we have to serve an annual visitor number of 36 million,” Mr Li stated. M.G.
4
January 22, 2014
Macau Air Macau adds flights for CNY The city’s flag carrier Air Macau Co Ltd has so far added eight charter flights to meet increased demand during the Lunar New Year holidays starting at month-end. The carrier will added three charter flights between Macau and Hokkaido, Japan and one charter flight for Seoul, South Korea, according to its press statement. It also includes one additional return flight for Zhengzhou, capital of Henan province; and three for Kaohsiung in Taiwan. The carrier also has 16 charter flights from and to Daegu in South Korea in the period from January 1 to March 1.
Over 2,000 apply for affordable housing With two months left for people to apply for subsidised public homes, the 1,900 flats up for purchase are already heavily over subscribed, according to Housing Bureau. It has received “more than 2,000 applications” from December 18 until early this month, Chinese-language newspaper Macao Daily News reported. The threemonth application window runs until March 17. The available flats for this round of applications are at Ilha Verde, Taipa and Coloane. Last year the bureau recorded more than 15,000 applications for 1,544 subsidised homes with one bedroom.
AustCham’s new CEO for HK and Macau Dean White has been appointed as new regional chief executive of AustCham – the Australian Chamber of Commerce in Hong Kong and Macau. Mr White has an extensive background in business development, event management, hospitality, and recruitment having previously worked with global companies including Hyatt International, Starwood Hotels & Resorts and Manpower Group. He takes over from Andrew Quinlan who was interim chief executive since AustCham’s former chief executive Kirsty Boazman left the chamber in November to become chief of staff to Ian Macfarlane, Australia’s federal Minister for Industry.
Junket firm Dore now Sino Credit Dore Holdings Ltd – an investor in the Macau casino VIP business – says it’s changed trading name on the Hong Kong Stock Exchange to Sino Credit with effect from 9am yesterday. The stock code of the firm will remain 628. The business has been known as Sino Credit Holdings Ltd for identification purposes since December 16. The change coincides with the junket investor’s purchase of a mainland pawnshop business. An initial deal for a majority in Guangdong Lido Pawnshop Co Ltd and its sister firm Guangzhou City Yuenqian Investment Consultancy Ltd was done in July.
Junket commission war boosts ‘side-wagering’: analyst U.S. Congress report in November estimated Macau casino market worth six times official figures Michael Grimes
michael.grimes@macaubusinessdaily.com
A
possible price war between Macau’s VIP promoters – on commissions paid to the agents that bring in high rollers – could increase the prevalence of “side wagering” in the city’s junket rooms, says an analyst. David Bain, a senior analyst at independent brokerage Sterne Agee in the United States, cites three independent sources as identifying the trend. “Three independent…checks cite higher overall junket agent commissions being paid by promoter groups,” wrote Mr Bain. “While the higher commissions paid to agents by promoters do not impact margins for casino operators, checks cite a possibility for additional side-wagering as a potential consequence from the trend, which would be negative for operators and forward VIP market results,” he adds. It would also lead to an under reporting of the gambling tax liability from junket room play,
6x bigger True size of Macau’s gaming market suggests U.S. Congress report
although there’s no suggestion that casino operators themselves would knowingly be party to such illegal acts. But the ‘side-wagering’ issue has also been raised privately recently by other gaming analysts. They view it as possibly a phenomenon of the tighter competition between junkets as casino operators raise the qualifying threshold for official rolling chip volume. A promoter that doesn’t meet certain monthly thresholds can be asked to give up a junket room. A player’s agent may offer his client side-wagering as an incentive to keep him playing the legal way.
U.S. report Steve Vickers, former head of the Royal Hong Kong Police’s Criminal Intelligence Bureau, said in evidence to the U.S.-China Economic and Security Review Commission of the United States Congress – which published its latest report in November – that the real value of Macau’s gaming industry is likely to be six times larger than the official reported size. The U.S. Department of State’s International Narcotics Control Strategy Report 2011 cited illegal side-wagering in Macau’s VIP rooms as possibly ten times greater than the city’s official reported revenues. Last year Macau officially generated 360.75 billion patacas (US$45.2 billion) according to government data. The term side-wagering can cause confusion, as it is sometimes taken as equivalent to ‘back-betting’ – a phenomenon that in the casino context can cover authorised as well as unauthorised play on mass-
market casino floors. In casino table back betting, either bystanders who don’t have a seat at the table, or people physically absent from the casino but linked to a game by a telephone controlled by a third party, will make bets on the outcome of games played by others. The latter telephone version is also known as ‘proxy’-betting. In casino table mass-market ‘back’- or ‘proxy’-betting, the bettors need not have any physical chips in the game.
The multiplier In the Macau VIP rooms there’s an alleged phenomenon often known in the casino industry not as ‘sidewagering’ but as ‘the multiplier’ The multiplier is in essence a private arrangement between junket agents and their customers, governing the size of the bets placed. Most commonly, it occurs in two basic forms, with essentially the same outcome. The first is when the agent agrees with players that whatever the value of chips placed on the table, the ‘real’ money staked is multiplied by an agreed number. For example, if the customer placed a HK$1,000 bet and the agreed multiplier is 10, then the ‘real’ bet is HK$10,000. The second common form is when it’s agreed that the ‘real’ bet is denominated in a different currency to that of the actual chips placed. For example, the customer places a HK$1,000 chip on the table, but agrees with the junket operator that the bet is in reality denominated in US dollars, so the ‘real’ bet is US$1,000, which represents a multiplier of 7.76 times, being the current retail exchange rate between HK dollar and the US dollar.
5
January 22, 2014
Macau
Weidner firm says has ‘right’ to sell Bloomberry stock But Philippine firm wins temporary court order to block the deal to institutional investors Michael Grimes
michael.grimes@macaubusinessdaily.com
G
lobal Gaming Asset Management – a company led by former Las Vegas Sands Corp executive Bill Weidner – said yesterday it had the “right” to sell shares it holds in Philippine casino developer Bloomberry Resorts Corp. “We purchased and paid for our stock in Bloomberry entirely appropriately, and we own that stock. Clearly, we are entitled to the full rights of any shareholder, including the right to sell it,” said an e-mail from a GGAM spokesman in the United States to Business Daily. But Bloomberry itself said yesterday in a filing to the Philippine Stock Exchange that it had won a 20-day temporary injunction from the Regional Trial Court of Makati in Manila to block the sale being completed. In September, Bloomberry terminated GGAM’s management contract for the US$1.2 million (9.6 billion patacas) Solaire Resort & Casino in Manila.
Solaire Resort & Casino in Manila
GGAM had held the contract from the time the property opened in March last year, and had also purchased 8.7 percent of
Bloomberry prior to the opening. According to a Bloomberry filing on January 17, GGAM had contracted to sell its shares on January
15 “to approximately 50 institutional investors” and was poised to complete the sale by a cross transaction through the PSE.
GGAM said in September it was taking the termination of its casino contract to arbitration in Singapore. In a filing at the time, Bloomberry had accused the firm of breach of contract, including not spending “any material time in attending to the management of Solaire”. But yesterday a GGAM spokesman said: “In every way, GGAM has acted properly and the allegations by Bloomberry are simply wrong. We expect its claim to be denied”. Bloomberry – led by Philippine entrepreneur Enrique Razon – said in its January 17 filing that the shares were the subject of a counterclaim by some of its subsidiaries, and that matter related to the arbitration case. Mr Weidner was president and chief operating officer of LVS during its construction of Sands Macao, which opened in 2004, and the US$2.4 billion The Venetian Macao, which opened in August 2007.
66
January 22, 2014 April 19, 2013
Macau Brought to you by
HOSPITALITY They can afford it The tourist price index (TPI) tracks the prices for almost 300 sorts of goods and services in eight main categories, which are sub-divided into groups and sub-groups. The prices of groups of goods and services are more volatile than the prices of categories of goods and services. For instance, the annual rate of inflation in prices of goods in the category called “food, alcoholic beverages and tobacco” was about 8.4 percent in the fourth quarter of last year. But the annual rates of change in the prices of the various kinds of food in that category ranged from deflation of 2.5 percent to inflation of 23 percent. The annual rates of alcoholic drink price inflation and tobacco product price inflation were both over 7 percent, but they accounted for under one percentage point of inflation in the “food, alcoholic beverages and tobacco” category because they carry little weight in the calculation of the tourist price sub-index for that category.
Bangkok emergency as Macau flights cancelled THAI Smile’s Monday and Tuesday services scratched and other airlines report drop in bookings Stephanie Lai
sw.lai@macaubusinessdaily.com
T
hailand’s government last night announced a 60-day state of emergency in Bangkok and the surrounding provinces. The news came hours after budget airline THAI Smile cancelled two return flights yesterday between Macau International Airport and Bangkok’s Suvarnabhumi Airport. The airline did the same thing on Monday. Prior to the Thai government’s announcement, THAI Smile’s Hong Kong and Macau office told Business Daily that the ongoing political conflict in Bangkok had reduced bookings. “When our passenger load factor gets below 50 percent, we have to cut
The six groups of goods and services that carry most weight in the calculation of the TPI together account for about 75 percent of the index. Add jewellery and watches to those six groups, and together they account for 85 percent of the index. Among the six groups represented in the chart, the annual rate of inflation in the fourth quarter of last year was fastest in the prices of hotel accommodation. Accommodation price inflation was twice the general rate of tourist price inflation, which was 6.3 percent. The annual rates of food price inflation, inflation in the cost of dining in restaurants and clothing price inflation were the next-fastest. In each case inflation was about the same as or slightly faster than the general rate. J.I.D.
9.2 %
Average rise in food prices, 2013
the flight,” said sales manager Kung Chun Fai. “And this is the case for January 20 and 21.” “For the remaining days this week, we didn’t plan any more flight cancellations as we’re informed by our Thai headquarters that the situation is still okay there,” said Mr Kung prior to the declaration of emergency. Business Daily reported last week that budget carrier AirAsia Bhd and local flag carrier Air Macau Co Ltd had also seen the ongoing antigovernment protests in Bangkok hit the airlines’ bookings in December and January, and brought down their passenger load factor.
ADA-Administration of Airports Ltd, responsible for the air traffic management of the local airport, told Business Daily yesterday – prior to the emergency announcement in Thailand – that it has received no further requests from airlines applying to cut flights between Macau and Bangkok in the remaining days this week. Last Friday, one supporter of the anti-government People’s Democratic Reform Committee was killed and 39 others were wounded after a grenade was thrown into a throng of protesters while they were marching in the Thai capital.
Fake money menace on the rise Number of cases found last year doubled, says police chief
T
here was an increase in the number of cases involving bogus banknotes and counterfeit credit cards last year, the police said yesterday. Judiciary Police director Wong Sio Chak said that a total of 137 cases where busted in 2013, nearly twice as many cases a year earlier, TDM Radio reported yesterday. Mr Wong recalled that high-quality forgeries of HK$1,000 notes were found here last month. Between the fakes first coming to light in December and January 3, the authorities here
seized 152. Half were found in banks and the rest in casinos. The well-counterfeited banknotes found in Macau and Hong Kong are believed to have been printed in the mainland. Mr Wong said the case is still being investigated. The police “has found some evidence and it has some leads” but needs more information to wrap up the investigation, Mr Wong was quoted as saying. The police in Hong Kong have said they believe the counterfeiters are putting the fakes into circulation in
Hong Kong and Macau in their effort to exchange them for genuine cash. Investigators are still looking into whether the fake HSBC notes and the fake Bank of China notes were counterfeited by the same hand. Macau and Hong Kong have asked the mainland authorities to help find the origin of the bogus banknotes. Yesterday, Mr Wong also said that the number of human trafficking cases found last year increased to 35, almost a two-fold increase from 2012.
You will remember.
@ : signature@macaubusiness.com tel : +853 2833 1258
welcome
excellence
T.A.
77
January 2014 April 19,22, 2013
Macau
Electricity firm’s talks on govt payments ‘normal’ CEM will continue to subsidise prices to the consumer despite getting only half investment budget requested Stephanie Lai
sw.lai@macaubusinessdaily.com
Franklin Willemyns, CEO of CEM
D
elay to some major public infrastructure projects accounts in part for the gap between the investment in electricity supply offered by the government and the amount the city’s power supplier originally requested for 2014. So said Franklin Willemyns, chief executive of CEM – Companhia de Electricidade de Macau SA, the city’s sole electricity supplier – on the sidelines of a media lunch yesterday to mark the Lunar New Year. On Monday the government announced that it had approved only 640 million patacas (US$80 million) out of 1.2 billion patacas in investment cash that CEM had requested for 2014. “The [approval] process is quite normal,” said Mr Willemyns yesterday. “At the beginning of this year we already got quite a substantial part of our capital expenditure approved…If
there are some infrastructure projects that are delayed, we would have to delay our part as well,” he added. “For some [investment] projects they [the government] are requesting to have more information,” noted the executive. “And some others may be delayed, for example, the ones related to the light railway train [Light Rapid Transit system], especially in the Macau peninsula where the infrastructure still does not have a clear timetable.” Mr Willemyns said the company has originally planned to build two power substations on Macau peninsula for the LRT, but he didn’t disclose the cost. CEM said that last year it invested 853 million patacas, mostly for power infrastructure including a high voltage substation in Ilha Verde, electricity supply to the Hengqin campus of University of Macau, and
Jardine to buy stake in luxury auto dealer Company selling vehicles here gets more exposure to the mainland market
J
ardine Strategic Holdings Ltd agreed to buy a 20 percent stake in Chinese premium car distributor Zhongsheng Group Holdings Ltd to benefit from rising luxury demand in the world’s biggest auto market. Jardine Strategic, the owner of hotels to convenience stores around Asia, will invest about HK$5.6 billion (US$722 million) in Beijing-based Zhongsheng, a distributor of luxury car brands including Mercedes-Benz, Audi and Porsche. The Chinese company will use the funds to expand the number of sales outlets in the country, according to a statement yesterday. Jardine Motors, a wholly-owned subsidiary of Jardine, sells motor vehicles in Macau, Hong Kong, mainland China and the U.K., according to the company’s website. Jardine sells Mercedes-Benz and Citroen vehicles in Singapore and Malaysia through its Singapore-listed unit, Jardine Cycle & Carriage Ltd. The investment by Jardine Strategic expands the company’s presence in a market that became the first to surpass 20 million in annual new vehicle deliveries last year. “Jardine is not only a financial investor but also a strategic investor,” said Ole Hui, a Hong Kong-based
analyst at Mizuho Securities Asia Ltd. “This may be just the first step in a longer term cooperation.” Zhongsheng will issue 238.6 million shares at HK$10.80 each and sell convertible bonds worth HK$3.09 billion to Jardine, according to the statement. After fully exercising the convertible bonds, Jardine Strategic will own about 20 percent of Zhongsheng, according to a statement. “The combination of Zhongsheng’s strong presence in the China motor dealership market, coupled with Jardines’ in-depth experience in the sector across Asia and its longterm vision, represents a power partnership,” Zhongsheng chairman Huang Yi said in a statement. “Zhongsheng is one of China’s premier motor dealership groups representing many internationally renowned marques,” Adam Keswick, Jardine Strategic’s director, said in a statement. “Thi s l o n g - ter m s tr a teg i c investment provides us with a greater exposure to the mainland market in a sector we understand well and in which we believe that Zhongsheng has the potential for substantial growth.” Bloomberg News
the construction of two sub stations for the LRT in Cotai and Coloane.
Rates held The power supplier also said its existing policy of subsidising power bills for households and smalland medium-sized companies will remain this year. Households and SMEs, classified as ‘group A’ by CEM, enjoyed an average 20 percent discount on their power bills in 2013, equal in total to 114 million patacas of subsidy from CEM. The firm said that meant users in that consumer band paid only 0.36 patacas per unit instead of the market cost of 0.45 patacas per unit.
“We’ve gone beyond our contractual obligation giving discounts [on power charges],” said Mr Willemyns. “We did it because we have room to do [so] in terms of our operational expenses.” “As I mentioned last year, we expect to have improvements in our results despite having given more than 100 million patacas of discounts during the whole year of 2013,” he said. “This is possible thanks to our improvements in terms of operational efficiency.” The power supplier’s CEO noted that the company does not expect any need of tariff increases this year. He did not disclose the likely profit for 2013.
88
January 22, 2014 April 19, 2013
Greater China China sovereign fund names vice chairman China’s US$575 billion sovereign wealth fund, China Investment Corp (CIC), has appointed a new vice chairman and president as the incumbent is due for retirement, two sources with knowledge of the matter said. Li Keping, CIC’s chief investment officer, will replace Gao Xiqing as the fund’s vice chairman and president, said the sources, who declined to be named because they are not authorised to speak to the media. CIC was not immediately available for comment. Mr Li, who has an economics degree from China’s prestigious Peking University, was previously the deputy chairman of China’s largest pension fund, China’s National Council for the Social Security Fund. Created in 2007, CIC is tasked to help China invest its US$3.8 trillion-and-growing foreign exchange reserves. But because of the mammoth size of China’s national savings, the government has formed other domestic funds that rival CIC in the hope of further improving returns. CIC reported an annual return of 10.6 percent in 2012, reversing from 2011’s loss of 4.3 percent. Its cumulative annualised return since inception is 5 percent.
Cnooc sets 2014 output target lower Cnooc Ltd, China’s biggest offshore oil and gas producer, dropped the most in more than two years in Hong Kong as two analysts downgraded the stock after its forecast for output growth fell short of target. Cnooc shares fell as much as 6.3 percent to HK$13.08, the biggest fall since October 2011. The benchmark Hang Seng Index gained 0.5 percent. The Beijing-based explorer will produce 422 million to 435 million barrels of oil equivalent, or a 5.6 increase from a year earlier, it said in a statement to the Hong Kong Stock Exchange. The company produced 412 million barrels of oil equivalent in 2013, including 61 million barrels from Canada’s Nexen Inc. Cnooc, which bought Nexen for US$15.1 billion last year in China’s biggest overseas acquisition, maintained its 6 percent to 10 percent average annual production growth target from 2011 to 2015 with the proviso that key offshore projects start on time later this year or early next, chief executive Li Fanrong said at a press conference in Hong Kong. Nomura Holdings Inc and Sanford C. Bernstein analysts downgraded the stock after the output projection.
Steel bond fall flags industry’s woes Bonds of Nanjing Iron & Steel Co, partly owned by Chinese billionaire Guo Guangchang, are set for their worst month on record as concern mounts the government’s campaign to reduce smog and overcapacity may exacerbate losses. The yield on the mill’s 2018 notes rated AA+ soared 315 basis points since December 31 to 11.79 percent, on track for the sharpest jump since the securities were issued in May 2011, according to exchange data. That compares with the 6.99 percent average yield on similarmaturity corporate notes in China with the same credit grade. Mr Guo, China’s 13th richest man with a net worth of US$4.6 billion, controls Nanjing Steel as chairman of the conglomerate Fosun International Ltd. Nanjing Steel, which lost 561.3 million yuan (US$92.7 million) in 2012, faces possible delisting of its 2018 bonds should it post a second straight loss for last year, according to Shanghai stock exchange rules. Notes by other makers of the metal including Anyang Iron & Steel Inc and Xinyu Iron & Steel Co. have also tumbled as authorities this month told provinces and municipalities to cut air pollutants by as much as 25 percent. “Investors are worried the steel industry may underperform because of the fight against air pollution and the curb on overcapacity,” said Chen Ying, a bond analyst at Sealand Securities Co in Shenzhen. “They’re also concerned Nanjing Steel may report a second year of losses for 2013.”
PBOC cash injection soothes Bourses up after central bank injects cash to curb rate spike
C
hina’s benchmark moneymarket rate fell while stocks rebounded as the central bank added more than 255 billion yuan (US$42 billion) to the financial system and expanded a loan facility to meet Lunar New Year demand for cash. The seven-day repurchase rate, a gauge of interbank funding availability, dropped 88 basis points to 5.44 percent in Shanghai, according to a daily fixing compiled by the National Interbank Funding Centre. It surged 153 basis points on Monday, the most in seven months. The Shanghai Composite Index climbed 0.9 percent yesterday, after closing below 2,000 on Monday for the first time since July. Asian markets were also gliding higher after China’s central bank pumped extra money into the financial system. The People’s Bank of China added funds to large commercial banks using its Standing Lending Facility and conducted 255 billion yuan of reverserepurchase agreements yesterday. The monetary authority is also allowing small- and medium-sized banks in 10 regions to tap its SLF on a trial basis before the week-long Lunar New Year holiday starts on January 31. The measures are “significant steps” that will reduce risk in the interbank market and help restore confidence as concern mounts about potential defaults in wealthmanagement products, Nomura Holdings Inc said. Money-market rates typically spike before the new year break, a period in which cash gifts are made and families get together for celebratory feasts.
The Lunar New Year period sees increased demand for cash
“The PBOC knows it can’t afford any systemic risks even if it wishes to conduct stress tests on the banks,” said Hu Yifan, chief economist at Haitong International Securities Group Ltd in Hong Kong. “It’s obvious that the market is still vulnerable so the PBOC has to provide cash to ease the shortfall, at least before the Lunar New Year.”
Reverse repos The People’s Bank of China conducted 180 billion yuan of 21day reverse repos at a yield of 4.7 percent yesterday, it said on its
website. That was the first use of 21-day contracts since 2005, data compiled by Bloomberg show. A further 75 billion yuan was injected using seven-day reverse repos at a yield of 4.1 percent, the same rate as when the agreements were last auctioned on December 24. “The amount was more than expected, with the market expecting injections of 100 billion to 200 billion yuan,” said Cheng Qingsheng, a Shanghai-based analyst at Evergrowing Bank Co. “It’s hard to say the PBOC has changed its neutral to tight stance. The SLF expansion may have been aimed at preventing
Seven IPOs halt trading after 44 pct share rally Eight companies started trading in Shenzhen yesterday
S
even of the eight Chinese companies that started trading in Shenzhen yesterday were halted for a second time after gains exceeded limits set by the city’s exchange. Shares of Zhejiang Wolwo BioPharmaceutical Co, Chengdu Tianbao Heavy Industry Co, Guangdong Qtone Education Co and four other companies were suspended from 10.30am until 2.57pm, three minutes before the close, after they jumped at least 44 percent from their initial public offering prices. All seven posted gains of 45 percent or more by the close. Hangzhou Sunrise Technology Co climbed 19 percent, the only stock that wasn’t halted from trading. The Shenzhen Stock Exchange warned yesterday of the risks in “blindly” speculating in IPOs. China, the world’s largest market for new share sales in 2010 with a record US$71 billion raised, had the first IPO since October 2012 last week as policymakers drafted rules aimed at tightening supervision. “It’s hard to change Chinese investors’ habit of speculatively trading in new shares,” said Wei Wei, an analyst at West China Securities Co in Shanghai. “Unless there’s an
example of a debut company falling below its offer price, the practice won’t be stopped.” Trading in shares of the seven companies were suspended as stock prices reached the threshold of a 44 percent move from their IPO prices, the level that’ll trigger suspension until three minutes before close on first-day trading by the Shenzhen exchange. Trading was initially halted for an hour after 9.30am as the shares exceeded the limit of a 32 percent gain.
Share declines Neway Valve (Suzhou) Co, the first company to start trading after the more than yearlong IPO freeze, has fallen 14 percent in two days since the shares jumped 43 percent on the first day of trading on January 17. Anhui Yingliu Electromechanical Co said it will debut in the Shanghai Stock Exchange today. China’s securities market hasn’t established a culture of rational investment, the Shenzhen Stock Exchange said in a statement on its website yesterday. The China Securities Regulatory Commission announced an end of
the moratorium on IPOs by the end of November, publishing new rules aimed at cracking down on overpricing and make offerings more market-based. It has approved 52 companies for IPO sales so far. The IPOS are testing the CSRC’s attempts to revive confidence in stocks after a 37 percent tumble in the benchmark Shanghai Composite Index during the past four years. The gauge gained 0.9 percent to 2,008.31 yesterday after closing on Monday at its lowest level in more than six months. The Shenzhen Composite Index added 1.5 percent, paring this year’s loss to 1.4 percent. Bloomberg News
99
January 2014 April 19,22, 2013
Greater China
Asia nerves
Taiwan’s Perng attacks monetary easing Criticises advanced economies for spurring instability
US$42 T bln
The central bank added to the financial system
any systemic financial risks.” Smaller lenders can seek funding before the holiday via the SLF when the seven-day repo rate exceeds 7 percent, according to a document signed by the monetary authority’s Guangzhou branch and seen by Bloomberg News. Other rate thresholds are for the overnight repo rate to breach 5 percent and the 14day to climb above 8 percent, levels that will prompt local branches of the PBOC to supply cash at those rates. The PBOC will conduct the SLF trials in the cities of Beijing and Shenzhen, as well as Jiangsu, Shandong, Guangdong, Hebei,
Shanxi, Zhejiang, Jilin and Henan provinces, according to the statement on its website. A 120 billion yuan quota has been set aside for the trial, according to two traders familiar with the matter, who asked not to be identified as the information is confidential. “It’s correct to target the smaller banks as they are the ones that always face cash shortages before the Lunar New Year,” said Tse Kwok Leung, the Hong Kong-based head of policy and economic research at Bank of China (Hong Kong) Ltd. “That is helping ease market concerns over liquidity and hence the swaps decline. The facility is more effective than injections via reverse repos, which usually guide funds toward the major banks.” Yesterday’s advance in the Shanghai Composite Index was led by financial stocks, with Citic Securities Co and Haitong Securities Co climbing at least 1.7 percent in Shanghai. The Hang Seng China Enterprises Index rallied 1.8 percent in Hong Kong, the most since November 18. Bloomberg News/AFP
aiwan’s central bank governor Perng Fai Nan criticised monetary easing in advanced economies for destabilising financial markets, as the U.S. Federal Reserve’s record stimulus last year spurs funds into emerging markets. Developed nations have an “exorbitant privilege” that needs to be tempered with a sense of responsibility, Mr Perng wrote in an article for The Banker magazine posted on the monetary authority’s website yesterday. The overall benefit of unusually accommodating policy “remains to be seen,” while other countries suffer “unintended and undesirable consequences,” Mr Perng said. Global funds bought US$9.2 billion more Taiwanese equities than they sold in 2013, exchange data show, as the U.S. and Japanese central banks purchased domestic bonds to lower interest rates. Taiwan’s monetary authority has sold the greenback on most days since 2012, according to the traders who asked not to be identified. “It’s harsh, and I’ve never seen Governor Perng lash out like that,” said Tim Condon, Singapore-based head of Asian research at ING Groep NV. “Central banks need to be in the market to soothe this volatility. It makes for a complicated life when they have to intervene in the foreignexchange market.” Overseas investors account for 36 percent of currency trading in Taiwan, according to the article. The local dollar weakened an average 0.4
percent in the last half hour of trading last week amid suspected intervention. The central bank has said it would maintain order if excessive volatility endangers financial stability, after the Fed said it would cut its bond purchases by US$10 billion starting from January.
Disrupted markets Monetary easing in developed nations, whose business cycles are “increasingly out of sync” with the rest of the world, has “seriously disrupted” global financial markets, Mr Perng said. An independent monetary policy is “only attainable when the capital account is managed” because of the impact of the global financial cycle, he added. The January 2 article was published in a special issue for the World Economic Forum to be held in Davos, Switzerland starting today. Taiwan’s dollar weakened 2.7 percent last year as the Fed prepared to reduce its bond-buying programme. Exports, which account for about 60 percent of the island’s economy, climbed 1.4 percent in 2013, data showed on Monday, after shrinking 2.3 percent in the previous year. The South Korean government will take action to stabilise the currency market to help companies cope with a weaker yen, the trade ministry said last week. The Japanese currency has slid 5.2 percent against the dollar since the end of June, as the South Korean won advanced 7.4 percent. Bloomberg News
Chinese labour pool keeps draining Low-end labour market likely to become tighter
T
he mainland’s second straight annual drop in its workingage population is robbing President Xi Jinping of an engine of three decades of growth, underscoring the need to close the gap between his achievements and ambitions. Mr Xi and Premier Li Keqiang, who in November unveiled the broadest policy shifts since the 1990s, are facing a labour force decline that the United Nations estimates will total almost 30 million in the decade through 2025. China’s working-age population, or people age 16 to 59, fell by 2.44 million in 2013, the National Bureau of Statistics said on Monday. The demographic bind adds pressure on Beijing to find sources of growth beyond plans that may have a limited impact, including an easing of the one-child policy, while they try to absorb about 7 million college graduates a year. “The decline of the labour force just makes everything more difficult in terms of
generating growth,” said Freya Beamish, a Hong Kong-based economist with Lombard Street Research. “You have less people to take part in production and that reinforces the need to be more productive. It makes more urgent the need for China to find ways to shift capital to areas of the economy that can boost productivity.” While government data on Monday showed China’s US$9.4 trillion economy expanded 7.7 percent in the fourth quarter from a year earlier. Growth was 7.8 percent in the third quarter.
Higher costs China’s working-age population fell 3.45 million in 2012, the agency said last year, a figure that covered people age 15 to 59. NBS head Ma Jiantang said yesterday the age range was changed to reflect China’s labour law. “This will be a more and more important issue as the low-end labour market becomes tighter and tighter,”
said Shen Jianguang, chief Asia economist at Mizuho Securities Asia Ltd in Hong Kong. “That’s why manufacturing firms are bracing for higher costs and trying to improve efficiency by importing machine tools to have greater automation of production.” Growth in the labour pool contributed about 10 percent of China’s economic expansion over the past 35 years, with the influence waning in recent years, according to HSBC Holdings Plc. The key to expansion now is boosting
productivity through changes to the financial and fiscal systems and deregulation, said Sun Junwei, a Beijingbased economist for HSBC. The decline in China’s working-age may have a silver lining: helping the government restructure the economy away from investment and manufacturing-led growth as pressure on policy makers to create jobs eases, says Wang Tao, chief China economist at UBS AG in Hong Kong. “The government has a little less pressure to push fast growth,” she said. “This
will give them the incentive to reduce overcapacity in some sectors while the labour market is relatively tight because they have less worry over unemployment.” Ten million new manufacturing jobs would correlate with an economic growth rate of roughly 8 percent, whereas 10 million services sector jobs would correspond to a pace of about 5 percent, according to estimates from The Conference Board, a New York-based research group. Reuters
10 10
January 22, 2014 April 19, 2013
Greater China Taiwan revises Oct-Dec trade to growth Taiwan’s Finance Ministry has revised up fourth quarter exports to positive growth, citing system errors that had resulted in missing export data. Taiwan’s October, November and December trades now posted growth of 0.7 percent, 3.4 percent and 1.2 percent, respectively, adjusted from previous declines of 1.5 percent, flat and 1.9 percent, according to a statement released by the ministry late on Monday evening. “These errors came about because of the export declaration operation system changes in line with the CPT [Customs-Port-Trade] Single Window Project which caused certain export data to be excluded from the statistics files,” it said.
China axes cotton stockpiling scheme Beijing pledges switch to subsidy system for farmers increase in cotton and soy planting by farmers while also pushing domestic prices well above international markets, stimulating more imports. Global cotton prices, which climbed about 12 percent in 2013, may come under pressure from the change as it could free up more locally grown cotton, denting China’s demand for imported fibre. The country’s hoarding of domestic supplies is expected by the end of July to reach more than 12 million tonnes, or 60 percent of global stocks. China’s soy purchases will be less affected by the move as most crushers in coastal regions are already largely dependent on imports. Beijing also said it would maintain stockpiling for rapeseed, corn and sugar, as well as continuing to offer a minimum purchase price for wheat and rice. Some industry participants had expected changes to sugar and rapeseed stockpiling.
Not yet clear
Government may be forced to sell cotton at a loss
C
hina, the world’s top buyer of raw cotton and soy, will this year scrap its controversial scheme to stockpile the commodities and will trial direct subsidies for farmers instead, the government said in a policy document. The announcement is the first official confirmation the change will come in 2014, although market participants remain uncertain about
how the move will pan out as the document lacks specific details on timing, as well as on the structure and size of subsidies. “The key is not that they’re subsidising farmers but how much they will give,” said a trade source, who declined to be named. The shift had been widely anticipated after several years of stockpiling failed to encourage an
But some market participants warned that if the cotton subsidies were not far-reaching enough, that could curb Chinese production and actually buoy appetite for imports. Trials for the subsidy system for soybeans will be rolled out in the northeast and Inner Mongolia, while it will be tested in the far western province of Xinjiang for cotton growers. Xinjiang accounts for about 60 percent of China’s cotton output, and much of its higher quality, finer fibres. China’s total cotton output last year was about 6.3 million tonnes, down 7.7 percent, the National Bureau of Statistics said on Monday. Output from
6.3 mln tonnes
China’s total cotton output last year Xinjiang province was unchanged at 3.5 million tonnes. It is not yet clear if the subsidies will be offered to other cotton-growing provinces, which make up the rest of domestic supply. “If they only support Xinjiang, the rest of China will produce very little cotton if any, and domestic prices could rise,” said a second trade source. Beijing has been promoting cotton cultivation in Xinjiang where larger farms allow for more efficient production. Several sources expect the new policy to encourage farmers in eastern provinces such as Henan and Shandong, where cotton output has already been in sharp decline, to switch to food crops. “Without the support policy, acreage in Henan and Shandong provinces will likely drop. But Beijing is not too worried if it does; with so many stocks there is no need to encourage planting,” said one analyst who asked not to be named. The subsidy will be based on a target price, according to the document, following a system similar to one used in the United States.
Lenovo restarts talks to buy IBM server unit Companies abandoned talks last year over pricing
L
enovo Group Ltd has resumed talks to buy International Business Machines Corp’s (IBM) low-end server unit, a source familiar with the matter said – a purchase that would bolster its efforts to diversify beyond a shrinking PC market. The two companies failed to reach a deal last year after differing on pricing, with media reports then putting IBM’s hopes at between US$4 billion to US$6 billion for the unit, while Lenovo was said to be only willing to offer US$2.5 billion. Lenovo, the world’s biggest PC maker, said yesterday it was in preliminary talks about an acquisition. It declined to
name the seller but said it was making the statement in response to reports about its potential acquisition of a server business. It added that it had not entered into any definitive agreement and that no material terms had been agreed to. An IBM spokesman said on Monday the company wouldn’t comment on the matter. Dell Inc, which went private in a US$25 billion deal last year, has also been cited in media reports as a potential suitor for the business. A Beijing-based spokesman for Dell declined to comment. A deal for IBM’s x86
servers which power corporate data centres would fit in with Lenovo’s attempts to remould itself as a growing force in mobile devices and data storage servers, and with IBM’s shift away from
hardware towards software and services. “Everybody wins because even if IBM could double the profitability it’s still not good enough for IBM. On the other hand, Lenovo
Reuters
doubling the server business margins is a good deal for Lenovo,” said Alberto Moel, a Hong Kong-based analyst at Sanford C. Bernstein. Lenovo’s purchase of IBM’s Thinkpad PC business in 2005 for US$1.75 billion became the springboard for its leap to the top of global PC maker rankings. Mr Moel, who estimates that IBM’s low-end server business could be worth between US$2.5 billion to US$2.9 billion, said that with IBM having had several weak earnings quarters, it was likely more eager to do a deal than last year. But any deal would also likely invite scrutiny from the Committee on Foreign Investment in the United States (CFIUS) as servers were more of a “hot button” issue than PCs and phones, he said. He added that he expected a deal could still be done. Reuters
11 11
January 2014 April 19,22, 2013
Asia
Japan out of deflation, for now: minister Consumer prices rising but further gains in doubt, says Economics Minister Stanley White
J
apan appears to have escaped deflation for now, Economics Minister Akira Amari said yesterday, but warned that the risk of it returning cannot be ruled out as policymakers continue their efforts to foster sustainable growth. Mr Amari said it is important that wages rise faster than consumer prices and that he will closely watch annual wage negotiations that will take place this spring. Tokyo’s aggressive fiscal and monetary stimulus over the past year has sparked a recovery in the world’s thirdlargest economy. However, capital spending and wage rises have been slow to catch-up, leading some analysts to doubt that inflation can reach the Bank of Japan’s 2 percent goal. The minister’s comments come as the BOJ begins a twoday meeting where the central bank is likely to keep its massive quantitative easing programme unchanged, judging the economy is on track to meeting its 2 percent
The problem is there is no guarantee that we will not return to deflation Akira Amari, Japan’s Economics Minister
inflation target. “As of today, we can say we have escaped deflation. However, the problem is there is no guarantee that we will not return to deflation,” Mr Amari told reporters after a cabinet meeting. “So we are not in deflation, but there is a risk we could return to a deflationary
environment.” The country is moving smoothly toward the 2 percent target, Mr Amari added. The BOJ expanded its purchases of government debt and risk assets almost a year ago in an overhaul of its monetary policy to defeat 15 years of mild deflation
and reach its inflation target in about two years. Since then, consumer inflation has climbed above 1 percent, or about half of the BOJ’s price stability goal, which has raised hopes that the inflation target can eventually be reached. However, some members of the BOJ board have said
publicly that the two-year timeframe is overly ambitious and should be changed. Some economists also worry that Japan is relying too much on a weak yen to spur inflation and that once the impact from the currency is stripped out, inflation will be much weaker. Reuters
Stay in the finest hotels in Macau and read Business Daily news where it matters
Pimco casts doubts on BOJ’s inflation target Fund dropping Japan’s inflation-indexed government bonds
P
acific Investment Management Co LLC stopped favouring Japanese government bonds that benefit from consumer price gains as it predicts Abenomics won’t generate 2 percent inflation. Tomoya Masanao, head of portfolio management for Japan at the operator of the world’s biggest bond fund, said a year ago that linkers were a good play, citing Prime Minister Shinzo Abe’s plans for wide-ranging stimulus measures to stoke economic growth. Since then, Japan’s inflationindexed government bonds returned 4.2 percent, almost fivefold the 0.9 percent gain on non-indexed JGBs on similar maturities, Bank of America Merrill Lynch data show. “While we thought Japanese linkers were very attractive investments between late 2012 to 2013, they are not at current levels,” Mr Masanao said in an interview. “Back then, there were still plenty of upsides, even if we didn’t think inflation rate was going to increase to as much as 2 percent on average.” The yield gap between 10-year nominal government bonds and
inflation-linked debt rose to 1.12 percentage points on January 17, the highest since October. The breakeven rate, which signals bond investors’ expectations of future inflation, would be around 0.7 points if the impact of the two-stage doubling of sales tax to 10 percent from April is excluded, according to Mr Masanao. Consumer prices excluding fresh food increased 1.2 percent in November from a year earlier, the most in five years. The Bank of Japan more than doubled monthly bond buying last April to exceed 7 trillion yen (US$67 billion) and promised to more than double the monetary base, targeting annual inflation of 2 percent within two years to snap Japan’s decades of deflation.
Challenges remain Policymakers are likely to ease further if growth slows more than forecast after the sales levy increase, Mr Masanao said. The Ministry of Finance sold 300 billion yen of 0.1 percent, 10-year
inflation-linked notes on January 9 at 105.90 yen. Investors offered to buy 2.87 times the securities offered, down from a 3.74 bid-to-cover ratio at the prior auction on October 8. Linker issuance, which resumed in October after a five-year halt, will increase by at least 1 trillion yen to a total of 1.6 trillion yen in the fiscal year starting April 1, the ministry said last month.
“Japanese linkers aren’t necessarily cheap if we take into account their liquidity – investors should demand more risk premium,” said Mr Masanao. Japan’s 124 trillion yen Government Pension Investment Fund plans to buy domestic linkers in the fiscal year starting April 1. GPIF was advised last year by an expert panel to reduce holdings of JGBs to put more money into higheryielding assets. “The best destination for Abenomics would be sustainable real growth around 2 percent and nominal growth of 3-4 percent,” Mr Masanao said, referring to Abe’s economic policy. He added that neither of these are likely to be achieved this year. “The Bank of Japan won’t be at the stage to discuss exit strategy,” Mr Masanao said. “The greatest dilemma for the BOJ exiting unprecedented monetary easing, would be if we see inflation accelerate as they try to forcefully repress nominal yields or if a surge in bond yields trigger a fiscal crisis.” Bloomberg News
12 12
January 22, 2014 April 19, 2013
Asia Thai army chief calls for calm Thailand’s army chief called for calm after attacks on anti-government rallies in Bangkok injured 70 people, prompting authorities to consider declaring a state of emergency for the first time since 2010. Two grenades exploded at a demonstration site in central Bangkok on Sunday, injuring 28, and a grenade attack on a protest rally on Friday killed one person and wounded 40 others, according to the Bangkok Emergency Medical Centre. Violence is increasing as Suthep Thaugsuban, a former opposition party lawmaker, steps up efforts to oust Prime Minister Yingluck Shinawatra before an election on February 2. Mr Suthep wants the government replaced with an unelected council that would change laws to prevent parties linked to Ms Yingluck’s brother, former premier Thaksin Shinawatra, returning to power. “People who incite violence should understand that the losses will create hatred,” army Chief Prayuth Chan-Ocha said. “I’m concerned this will make people lose trust in officials, and they will try to get the military involved.” The Election Commission has urged the government to defer the vote until May, saying the political environment is too tense to proceed next month.
Higher NZ inflation raises chance of rate hike New Zealand could start raising interest rates as soon as next week after an unexpected rise in consumer prices in the fourth quarter underlined bubbling inflation pressures in a rapidly growing economy. Analysts say an interest rate hike at next Thursday’s Reserve Bank of New Zealand (RBNZ) policy-setting meeting is a close call, keeping the South Pacific nation on track to become the first developed economy to tighten in the current cycle. “Today’s data leave the door to a January hike – which was opened at the December MPS – well and truly open,” said RBC senior economist Michael Turner. “On balance, we see risks remaining skewed towards March, by which stage more information on the impact of housing credit controls should become more apparent.” Official data yesterday showed the consumer price index rose 0.1 percent in the three months to December 31, pushing the annual rate up to 1.6 percent – the highest since March 2012. The central bank had forecast a fall of 0.2 percent.
Goldman alumni to open Japan hedge fund by March Golvis Investment Pte, founded by three former Goldman Sachs Group Inc managing directors, plans to open its Japan-focused multistrategy hedge fund to investors this quarter, said two people with knowledge of the matter. Golvis Asia Opportunities Fund returned almost 2 percent in the first two weeks of January, said the people, who asked not to be identified as the information is private. It started trading early this month with money from the Singapore-based company’s founding partners and employees. Ryan Collins, Golvis’s head of business development, declined to comment on the fund as it is private. “The easy yen trade is over,” said Matt Pecot, Hong Kong-based AsiaPacific head of prime services at Credit Suisse Group AG. “Investors may shift allocations to managers with deeper history of long, short fundamental stock-picking in the Japan market.” Golvis, led by chief investment officer Koji Gotoda, senior fund manager Takayuki Kasama and chief operating officer Taiichi Hoshino, employs 12 people, said the people. They include a five-member team in Tokyo who report to Gotoda and Kasama and help with company fundamental research, they said.
Malaysia says Pacific pact hard Negotiators yet to announce a new time line for talks to be finished Chong Pooi Koon
T
alks on a 12-nation Pacific trade pact may be hard to finalise this year after a deadline for completion was missed last month, a Malaysian minister said. “It’s tough,” Mustapa Mohamed, Malaysia’s international trade and industry minister, said in an interview at his office in Kuala Lumpur. “It’s difficult to say when” talks could be wrapped up, he said. “You cannot rush into things. This is a very big trade pact, going beyond the conventional areas of tariffs. It’s natural that it’s taken quite some time.” Countries negotiating the U.S.-led Trans-Pacific Partnership, including Malaysia, did not meet an end-2013 deadline to conclude the deal and have not announced a new time line for talks to be finished. Malaysia’s government could rely on rising exports to support growth this year as consumer spending is poised to falter due to rising local prices. Negotiators have yet to decide when and where the next ministerial meeting would be held following talks in Singapore last month, Mr Mustapa said. Nothing substantive has been planned on the sidelines of the World Economic Forum in Davos this week, and a meeting may happen within the next one to two months, he said. TPP negotiators previously flagged a meeting for February. The TPP would create a free-trade zone linking an area from Australia
Drinks industry deals in Jan top 2013 activity
L
ess than a month into 2014, big beverage companies have already spent almost three times as much buying competitors as they did all last year. Coming on the heels of the slowest year for alcoholic beverages deals in almost two decades, beermaker Anheuser-Busch InBev NV announced it would spend US$5.8 billion to buy back Korea’s Oriental Brewery. That follows last week’s US$16 billion purchase by Suntory Holdings Ltd of distiller Beam Inc. “It’s a sector where M&A makes sense,” said Jonathan Fyfe, an analyst at Mirabaud in London. “There are probably more options to do things this year than in 2013 thanks to the fact these companies are deleveraging fast.” As Japanese companies like Suntory seek growth abroad to combat an ageing population at home, European drinks companies are targeting Asia as they seek to lock down control in a region where
both the beer and spirits markets are still expanding. That could bring the biggest brewers’ share of beer sales in Asia up toward the level of developed markets. While the top 10 brewers in the world now control about 65 percent of beer volumes, almost twice the level they did in 1998 after two decades of consolidation, that dominance is skewed toward developed markets, according to Nomura analysts. In Asia, the top four companies have just 43 percent of the beer market compared with 88 percent in North America, they estimate. The industry is still “relatively unconsolidated,” with the top four or five brewers in the world being joined by at least 40 others, according to Philip Morrisey, an analyst at Berenberg Bank in London. “In beer and in spirits, the major companies are cash generative and in a cycle of deleveraging,” Mr
Morrisey said. “While the market consolidated significantly in the past few years, there are lots of opportunities to come.” Suntory became the world’s third-largest liquor maker after last week’s agreement to acquire Beam bourbon, gaining brands including Maker’s Mark and Sauza tequila. The Japanese company offered to buy India’s United Spirits Ltd whiskey asset Whyte & Mackay from Diageo Plc, CNBC reported yesterday. Suntory spokeswoman Naoko Tsuda declined to comment on the report. Euromonitor estimates that the volume of beer sold in the AsiaPacific region will grow an annual pace of 4.9 percent in the five years through 2017, with spirits volume expanding at a pace of 5.4 percent. That compares with declines anticipated in western Europe and a stagnating North American beer market. Bloomberg News
editorial council Paulo A. Azevedo, Tiago Azevedo, José I. Duarte, Emanuel Graça, Mandy Kuok Founder & Publisher Paulo A. Azevedo | pazevedo@macaubusinessdaily.com Editor-in-Chief Tiago Azevedo DEputy Editor-in-Chief Vitor Quintã Associate editor Michael Grimes GROUP SENIOR ANALYST José I. Duarte Newsdesk Luciana Leitão, Stephanie Lai, Tony Lai EDITOR AT LARGE Alex Lee Creative Director José Manuel Cardoso WEB & IT Janne Louhikari Contributors James Chu, João Francisco Pinto, José Carlos Matias, Larry So, Pedro Cortés, Ricardo Siu, Rose N. Lai, Zen Udani Photography Carmo Correia, Manuel Cardoso Assistant to the publisher Laurentina da Silva | ltinas@macaubusinessdaily.com office manager Elsa Vong | elsav@macaubusinessdaily.com Agencies Bloomberg, Reuters, AFP, Xinhua, Lusa, Project Syndicate Printed in Macau by Welfare Ltd.
Business Daily is a product of De Ficção – Multimedia Projects Address Block C, Floor 9, Flat H, Edf. Ind. Nam Fong Av. Dr. Francisco Vieira Machado, No. 679, Macau Tel. (853) 2833 1258 / 2870 5909 Fax (853) 2833 1487 Email newsdesk@macaubusinessdaily.com Advertising advertising@macaubusinessdaily.com Subscriptions sub@macaubusinessdaily.com
13 13
January 2014 April 19,22, 2013
Asia
to complete this year Indonesia sees 2014 FDI
at record US$33 bln
Despite slower GDP growth, interest seen staying high We cannot be pushing the TPP at the expense of our national interest and national agenda Mustapa Mohamed, Malaysia’s international trade and industry minister
to Peru with about US$28 trillion in annual economic output. Malaysia has expressed wariness over some parts of the deal, including those related to stateowned enterprises and government procurement. Leaders from the U.S. to Malaysia and Japan must deal with opposition to the pact from lawmakers at home, obstacles that will have to be overcome for the agreement to be ratified.
Domestic issues “Lots of issues, domestic issues as well, these are real concerns,”
Mr Mustapa said. “The pace, we cannot be pushing the TPP at the expense of our national interest and national agenda.” The government is looking for exports to rise at a time when consumer spending comes under pressure as Malaysians grapple with the biggest increase in state controlled electricity and gasoline prices since 2008. Domestic demand has supported growth in the past two years as the global economy faltered. “We expect net exports to do better this year, contribution to growth will be a bit more,” Mr Mustapa said. “There are some brighter spots throughout the world. Nothing to shout about, but that’s still better than last year.” Exports climbed 6.7 percent in November from a year earlier, less than economists estimated. The ringgit has weakened about 1.8 percent against the dollar since December 18, when the Federal Reserve said it would start trimming bond purchases to unwind its unprecedented stimulus, making it the second-worst performer among Asia’s 11 most-traded currencies tracked by Bloomberg. The TPP, championed by U.S. President Barack Obama, goes beyond typical trade deals that focus on tariffs and market access, with discussions on protection for companies that compete against government-backed businesses and stricter safeguards for patents and copyrights. Bloomberg News
F
oreign investment in Indonesia can rise to a record US$32.8 billion this year, a government agency projected, even though the pace of increase last year slowed. For 2013, foreign commitments rose to 270.4 trillion rupiah (US$22.67 billion) an increase of 22.4 percent compared with the previous year’s 26 percent gain in rupiah terms. But last year’s performance appeared little improved from 2012 in U.S. dollar terms, as the 2013 total is equivalent to about US$22 billion at the rupiah’s current exchange rate. A weak rupiah, declining commodity prices and uncertainty over mineral export policies all took a toll on foreign investor confidence. The rupiah weakened more than 20 percent against the U.S. dollar in 2013, partly due to high inflation and the country’s large current-account deficit. Foreign investment commitments reached 71.2 trillion rupiah in the October-December period, 25.4 percent more than a year earlier in rupiah terms. The increase, an eighth straight quarterly record, underlines the attraction of Southeast Asia’s biggest economy, its vast natural resources and fast-growing middle class. After expanding by more than 6 percent in four of the past six years, Indonesia’s economy has begun to flag, hurt by declining export proceeds
amid weak commodity prices and volatility in consumer spending in the wake of rising fuel costs and higher interest rates. But while many foreign investors have retreated from Indonesia’s financial markets, the world’s fourth most populous country remains a big draw for multinational companies. In the third quarter of 2013, investment commitments were 67.0 trillion rupiah, or 18.4 percent above the year-earlier figure. The Indonesian FDI numbers do not include investments in the oil and gas sector. Reuters
Huge data theft hits South Korea Biggest card-data theft triggers resignations amid probe
S
outh Korea’s biggest theft of personal information on creditcard holders prompted dozens of top executives at financial firms including KB Financial Group Inc to offer to quit this week as a regulatory probe widened. Lee Kun-ho, chief executive of Korea’s largest bank, was among 27 executives who sent resignation letters to KB Financial CEO Lim Young-rok, an official at the Seoul-based company said yesterday, asking not to be named in accordance with company policy. Nine officials at Lotte Card Co also offered to quit, that company said in an e-mailed statement. The breaches triggered regulatory and criminal probes this month in a country where credit cards are used for more than half of total consumer spending. South Korean prosecutors have indicted three people on suspicion of stealing names, social-security numbers and card data tied to millions of customers of Lotte Card, KB Kookmin Card Co, and Nonghyup Bank. “ The incidents will
isn’t necessarily positive for earnings.” While there’s no evidence that the leaked information has been misused, the card companies will fully compensate victims for any damage, Financial Services Commission chairman Shin Je-yoon told reporters, according to an e-mailed statement. The regulator will consider revising rules to seek stricter punishment including fines, he said.
106 million Pieces of information have been transferred
Millions affected
Personal data of millions of South Koreans were leaked
probably hurt the firms’ brand value and lead them to incur one-time costs such as fines and compensation,” said Michael Na, a Seoul-
based analyst at Nomura Holdings Inc. “It will spur regulators’ demands that financial companies protect consumers, which
A total of 106 million pieces of information were transferred, the Financial Supervisory Service said in a statement. About 20 million card holders at Lotte Card and Nonghyup Bank and 40 million at KB Kookmin Card were affected, the FSS said. The estimate may include overlaps for multiple card holders or former customers. The FSS said that it began probing operations at Kookmin Bank, the nation’s largest lender, in relation to information breaches at the card unit. It ordered 14 other financial firms to examine possible data theft, without
disclosing the names of the institutions. The agency also started inspecting local units of Citigroup Inc and Standard Chartered Plc on Friday after prosecutors last month found that their customer information was leaked. The three card companies issued statements yesterday expressing regret for the breaches and their CEOs bowed in apology at a briefing broadcast on the YTN cable news network. Bloomberg News
14 14
January 22, 2014 April 19, 2013
Markets Gaming Stocks - Daily Performance (Hong Kong Stock Exchange) 83.2
122.6
35.4
82.8
121.5
35.2
120.4
35.0
119.3
34.8
82.4 82.0 81.6 Max 83.10
average 81.818
Min 81.20
Last 81.45
81.2
Max 122.5
average 120.325
Min 118.2
Last 119.5
66.0
118.2
Max 35.25
average 34.918
Min 34.60
Last 34.95
34.6
26.3
36.4
26.1
36.1
25.9
35.8
65.6 65.2 64.8 64.4 Max 65.95
average 64.589
Min 64.00
Last 64.50
64.0
Max 26.30
average 25.981
Commodities PRICE
DAY %
YTD %
WTI CRUDE FUTURE Feb14
94.2
-0.180141994
BRENT CRUDE FUTR Mar14
107.01
GASOLINE RBOB FUT Feb14
264.31
GAS OIL FUT (ICE) Mar14 NATURAL GAS FUTR Feb14
(H) 52W
(L) 52W
-4.287746393
106.2200012
85.56999969
0.620592384
-3.18465575
112.4399948
96.31999969
0.866279957
-5.125812125
286.9299889
243.68999
909.25
0.775838182
-3.451022033
954.5
840
4.314
-0.27739251
1.985815603
4.770000458
3.476000071
304.68
0.763964679
-0.600287094
317.8399801
278.4999847
Gold Spot $/Oz
1251.09
-0.3036
4.02
1696.2
1180.57
Silver Spot $/Oz
20.0984
-1.3047
2.7652
32.46
18.2208
Platinum Spot $/Oz
1457.74
-0.8171
7.5228
1742.8
1294.18
Palladium Spot $/Oz
746.15
-0.3246
4.9437
786.5
629.75
LME ALUMINUM 3MO ($)
1806.5
-0.823497118
0.347174004
2174
1736.25
7314
-0.354223433
-0.625
8346
6602
2076.5
-0.12025012
1.04622871
2230
1811.75
NY Harb ULSD Fut Feb14 METALS
LME COPPER 3MO ($) LME ZINC
3MO ($)
LME NICKEL 3MO ($) AGRICULTURE ROUGH RICE (CBOT) Mar14
14550
-0.98673018
4.676258993
18770
13205
15.52
-0.512820513
1.603927987
16.77000046
15.12000084
423.25
-0.176886792
0.296208531
606.5
406.25
WHEAT FUTURE(CBT) Mar14
564
0.088731145
-6.815365551
845
560.5
SOYBEAN FUTURE Mar14
1311
-0.417774402
1.431334623
1377.75
1174
117.15
-1.013941698
5.826558266
171.5500031
104.1499939
15.18
-0.262812089
-7.495429616
20.36999893
15.09999943
CORN FUTURE
Mar14
COFFEE 'C' FUTURE Mar14 SUGAR #11 (WORLD) Mar14 COTTON NO.2 FUTR Mar14
86.53
-0.311059908
2.232986767
90.61000061
76.65000153
World Stock Markets - Indices NAME
Last 25.95
25.7
Max 36.40
average 35.702
Min 35.50
Last 35.55
35.5
Currency Exchange Rates
NAME ENERGY
Min 25.75
COUNTRY MAJOR
AUD GBP CHF EUR JPY MOP HKD CNY INR THB SGD TWD PHP IDR AUDJPY EURCHF EURGBP EURCNY EURMOP EURJPY HKDMOP
ASIA PACIFIC
CROSSES
PRICE
DAY %
YTD %
(H) 52W
(L) 52W
0.8783 1.6423 0.9135 1.3535 104.72 7.9895 7.7569 6.0502 61.62 32.822 1.2793 30.221 45.25 12133 91.976 1.23639 0.82416 8.1868 10.8139 141.74 1.03
-0.3517 -0.1216 -0.3722 -0.1181 -0.4966 -0.0063 -0.0026 0.043 0.006 0.0701 -0.2267 -0.1324 -0.2873 -0.1648 -0.1468 -0.2451 -0.0036 0.1954 0.1091 -0.3739 0
-1.5579 -0.4727 -2.4302 -1.6638 0.2578 -0.0363 -0.0387 0.0678 0.2921 -0.1432 -1.1881 -1.3699 -1.8895 0.3132 1.819 -0.7829 1.2121 1.8835 1.6544 1.9543 0
1.0582 1.6603 0.9839 1.3893 105.44 8.0111 7.7664 6.2492 68.845 33.148 1.2862 30.23 45.305 12281 105.433 1.265 0.88151 8.4957 11.0434 145.69 1.032
0.8757 1.4814 0.88 1.2746 88.06 7.9818 7.7514 6.0393 52.89 28.56 1.2251 28.963 40.555 9603 86.41 1.21196 0.82307 7.8281 10.195 117.06 1.0289
Macau Related Stocks NAME
PRICE
ARISTOCRAT LEISU CROWN RESORTS LT
DAY %
YTD %
4.53
2.488688
-3.411515
5.12
3.29
990664
18
2.505695
6.824923
18.22
11.08
1785058
AMAX INTERNATION
1.78
-2.73224
3.48837
2.12
0.75
3107675
24.85
2.263374
0
28
22.85
11924164 931525
CENTURY LEGEND
0.43
0
0
0.68
0.26
CHEUK NANG HLDGS
7.27
-0.1373626
3.120565
7.45
5
45180
CHINA OVERSEAS
21.5
-0.462963
-1.376143
25
17.7
17665627
CHINESE ESTATES
19.2
-1.437372
-20.33195
24.7
10.384
21000
CHOW TAI FOOK JE
12.04
1.861252
4.152245
13.38
7.44
4938368
PRICE
DAY %
YTD %
(H) 52W
(L) 52W
DOW JONES INDUS. AVG
US
16458.56
0.2530912
-0.7124451
16588.25
13571.86
NASDAQ COMPOSITE INDEX
US
4197.582
-0.5002977
0.5026155
4219.276
3105.365
GALAXY ENTERTAIN
1.363892
6875.62
6023.44
HANG SENG BK HOPEWELL HLDGS
27.2
HSBC HLDGS PLC
85.75
0
2.98
0
FTSE 100 INDEX
GB
6841.14
DAX INDEX
GE
9731.94
0.1650902
1.88209
9789.89
7418.36
NIKKEI 225
JN
15795.96
0.9863391
-3.040576
16320.22
10441.11
HANG SENG INDEX
HK
23033.12
0.4543165
-1.172517
24111.55078
19426.35938
CSI 300 INDEX
CH
2187.41
0.9887844
-6.120789
2791.303
2023.171
TAIWAN TAIEX INDEX
TA
8599.9
-0.2512306
-0.1348123
8668.95
KOSPI INDEX
SK
1963.89
0.5174585
-2.359121
S&P/ASX 200 INDEX
AU
5331.463
0.6877561
JAKARTA COMPOSITE INDEX
ID
4454.421
(L) 52W VOLUME CRNCY
BOC HONG KONG HO
COUNTRY
0.06450452
(H) 52W
EMPEROR ENTERTAI
5.15
-1.717557
28.75
5.4
1.93
3365000
FUTURE BRIGHT
4.78
-0.6237006
1.918975
5.3
1.609
2544000
81.45
-1.570997
17.10999
84.5
30
13775303
123.6
0.6514658
-1.670642
132.8
110.6
500534
0.7407407
3.619048
35.3
23.2
749022
1.901365
90.7
77.85
6474080
1.360542
4.66
2.5
6758000
HUTCHISON TELE H LUK FOOK HLDGS I
27.15
0.5555556
-7.966102
34
16.88
1711000
MELCO INTL DEVEL
31.25
-2.799378
9.649123
32.5
11.52
4187640
7637.2
MGM CHINA HOLDIN
34.95
-0.56899
5.589129
36.15
15.457
4204600
2063.28
1770.53
MIDLAND HOLDINGS
3.74
1.630435
0.268096
4.29
2.68
1253000
-0.3876356
5457.3
4632.3
173588000
0.5155958
4.217049
5251.296
3837.735
NEPTUNE GROUP
0.345
1.470588
1.470587
0.4
0.131
NEW WORLD DEV
10.24
0.589391
4.596527
15.12
9.35
7027244
SANDS CHINA LTD
64.5
-1.300689
1.815314
67.15
33.5
10385961
FTSE Bursa Malaysia KLCI
MA
1814.4
0.3767447
-2.815269
1882.2
1597
SHUN HO RESOURCE
1.65
-2.366864
0
1.92
1.33
0
NZX ALL INDEX
NZ
1039.987
0.6145303
4.11375
1048.998
904.128
SHUN TAK HOLDING
5.08
0.1972387
11.40351
5.18
3.27
12683635
PHILIPPINES ALL SHARE IX
PH
3662.36
0.05983329
1.329158
4571.4
3440.12
SJM HOLDINGS LTD
25.95
-0.3838772
-0.1923077
28
17.04
5038208
8.7
-1.58371
-1.805865
14.46
7.38
2181000 7856026
Euromoney Dragon 300 Index Sin
SI
599.38
-0.8
-1.98
NA
NA
STOCK EXCH OF THAI INDEX
TH
1288.77
-0.09457438
-0.7653704
1649.77
1205.44
HO CHI MINH STOCK INDEX
VN
559.91
1.127025
10.95455
560.18
440.48
Laos Composite Index
LO
1241.31
0.5003522
-0.9590369
1455.82
1224.94
SMARTONE TELECOM WYNN MACAU LTD
35.55
-1.659751
1.137976
38.25
19
ASIA ENTERTAINME
#N/A N/A
#N/A N/A
#N/A N/A
#N/A N/A
#N/A N/A
0
BALLY TECHNOLOGI
81.39
0.7426662
3.747614
81.8525
45.38
454977
BOC HONG KONG HO
3.17
0
-1.552796
3.6
2.99
15478
GALAXY ENTERTAIN
10.763
5.851692
19.45616
10.81
3.8975
37077 5806408
INTL GAME TECH
Shanghai Shenzhen Composite index is listing the biggest companies by market capitalisation. All data supplied by Bloomberg unless otherwise indicated.
17.77
2.185164
-2.147576
21.2
14.75
JONES LANG LASAL
103.83
-0.9822621
1.406388
105.78
80.86
207592
LAS VEGAS SANDS
81.93
1.310746
3.879799
81.96
47.95
4401370 2550868
MELCO CROWN-ADR
44.97
1.673073
14.66088
45.4799
17.76
MGM CHINA HOLDIN
4.48
3.464203
3.944317
4.66
2
1000
MGM RESORTS INTE
26.41
2.443755
12.28741
26.7
11.72
14797578
SHFL ENTERTAINME
#N/A N/A
#N/A N/A
#N/A N/A
23.25
13.88
0
SJM HOLDINGS LTD
3.33
2.461538
-0.2993986
3.6
2.2
10285
WYNN RESORTS LTD
215.7
2.670284
11.06534
215.99
111.3456
1709625
AUD HKD
USD
Hang Seng Index NAME
PRICE
DAY %
VOLUME
PRICE
DAY %
VOLUME
AIA GROUP LTD
30.2
1.003344
16574881
CHINA UNICOM HON
13.68
1.333333
22775492
ALUMINUM CORP-H
3.61
0
15433022
CITIC PACIFIC
10.12
0.1980198
6468988
BANK OF CHINA-H
3.15
1.286174
329406866
BANK OF COMMUN-H
5.87
0.8591065
37793438
29
0.1727116
14.5
BANK EAST ASIA BELLE INTERNATIO
NAME
CLP HLDGS LTD
NAME
PRICE
DAY %
64.4
0.625
2568679
SANDS CHINA LTD
28.75
-0.1736111
6213954
SINO LAND CO
14.28
0.990099
7686664
SUN HUNG KAI PRO
109.1
1.018519
8616634
93
-0.4815409
2456828
265.6
1.45149
2048509
23.9
0
2206357
10
0.8064516
5926157
52.75
1.05364
3208615
POWER ASSETS HOL
65.6
0
1561243
CNOOC LTD
16.32
0.4926108
46287676
1260442
COSCO PAC LTD
11.76
0
3138217
SWIRE PACIFIC-A
0
7192500
ESPRIT HLDGS
12.44
-0.48
4211743
TENCENT HOLDINGS
24
0.2087683
10140777
HANG LUNG PROPER
26.55
-0.1879699
7812341
TINGYI HLDG CO
CATHAY PAC AIR
13.78
0.2911208
3140232
HANG SENG BK
119.7
0.167364
1690249
WANT WANT CHINA
CHEUNG KONG
114.9
1.23348
3918568
HENDERSON LAND D
57
2.059087
5880582
WHARF HLDG
75.55
0.1325381
701703
20
1.112235
6329376
125.6
3.54493
9625332
76.5 -0.06531679
9291476
BOC HONG KONG HO
CHINA COAL ENE-H
7.7
-0.1297017
40174849
CHINA CONST BA-H
5.87
1.206897
202072100
CHINA LIFE INS-H
22.9
0.4385965
30126882
CHINA MERCHANT
25.6
0.3921569
4209584
CHINA MOBILE
HENGAN INTL HONG KG CHINA GS HONG KONG EXCHNG HSBC HLDGS PLC
85.45
1.064459
16569813
HUTCHISON WHAMPO
CHINA OVERSEAS
20.2
-0.2469136
19374736
IND & COMM BK-H
CHINA PETROLEU-H
8.36
0.9661836
101198904
CHINA RES ENTERP
25.2
0.8
77.35
1.243455
6697663
5.17
1.372549
317570965
LI & FUNG LTD
12.84
-0.9259259
17517410
4219717
MTR CORP
29.85
1.530612
4880670
MOVERS
33
12
VOLUME
5 23242
INDEX 23033.12 HIGH
23241.64
LOW
22884.93
CHINA RES LAND
17.16
1.179245
6849146
NEW WORLD DEV
12.98
1.564945
12528960
52W (H) 24111.55078
CHINA RES POWER
16.08
-0.618047
7490964
PETROCHINA CO-H
10.94
-1.263538
64234127
(L) 19426.35938
CHINA SHENHUA-H
33.35
-0.1497006
11160228
PING AN INSURA-H
63.35
1.198083
8338502
22884
17-January
21-January
15 15
January 2014 April 19,22, 2013
Opinion Business
wires
Partnership or Putsch?
Leading reports from Asia’s best business newspapers
Asahi Shimbun Japan’s Prime Minister Shinzo Abe said his administration wants to observe how the first phase of the consumption tax rate hike plays out after this April’s launch before giving the green light for the October 2015 second-phase increase. “I want to make the decision by year’s end,” Mr Abe said. The consumption tax is scheduled to rise from the current 5 percent to 8 percent in April. The Abe administration has to compile the draft budget for fiscal 2015 by the end of this year, meaning he has to decide on allowing the tax to increase to 10 percent by that time.
Korea Herald Top executives of KB Financial Group, NongHyup Card, and Lotte Card – all three companies involved in the recent financial data breach – said they would step down to take responsibility for the leak. The list of officials includes KB Kookmin Bank chief executive Lee Kun-ho and KB Kookmin Card chief executive Shim Jae-oh. Shin Je-yoon, the Financial Services Commission chairman, said that the Korean financial industry may lose its credibility altogether in the aftermath of the information leak, which affected up to 15 million people in Korea.
The Age The Abbott government’s Commission of Audit says it needs to delay its report and federal treasurer Joe Hockey has agreed to extend its deadline. It comes after Commission chair and Business Council boss Tony Shepherd admitted last week that he was under pressure to meet the “tight” deadlines. “The Commission has advised the government… it would require a short extension,” Mr Hockey said. “The government has granted this extension on the basis that it is important for this report to be as comprehensive as possible.”
The Star Industry players in Malaysia, especially original equipment manufacturers, have welcomed the move by the government to ease restrictions under the revised National Automotive Policy (NAP). The government announced that foreign car manufacturers could enter the highly lucrative and closely guarded 1.8 litre or less engine capacity car segment, provided that they manufacture energy efficient vehicles. Manufacturers say the revision provides a clear path as to where the industry would be heading.
Gordon Lafer
Professor at the Labor Education and Research Center at the University of Oregon
I
n 2010, I sat across the table from Assistant US Trade Representative Barbara Weisel, who was responsible for negotiating the Trans-Pacific Partnership (TPP), the mega-regional free-trade treaty among Vietnam, Malaysia, and ten other Pacific Rim countries that President Barack Obama’s administration wants to conclude in the coming weeks. At the time, I was Senior Policy Adviser for the U.S. House of Representatives’ Committee on Education and Labour – a position that made me the top congressional staff member responsible for upholding labour standards in international trade treaties. The purpose of the meeting was for Congress to understand what steps the Obama administration was taking to protect American workers from being forced into unfair competition with workers from low-wage trading partners. I asked Weisel what I thought was a simple question: “What is the White House’s position on democracy?” Weisel claimed not to understand, so I explained: A majority of congressional Democrats supported the principle that the United States should sign trade agreements only with countries that are democracies. Other democracies feel the same way. For example, trade agreements negotiated by members of the Commonwealth of Nations (formerly the British Commonwealth) contain just such a provision. The logic is obvious: If we in developed democracies had lacked the right to protest, speak out, organise unions, and vote for representatives of our choosing, we would never have ended child labour or established the eight-hour workday. Having used these rights to raise our own living standards, we should not now put developed countries’ workers in direct competition with workers who lack the basic freedoms needed to improve their own conditions. But my explanation did not help. Weisel stated simply that “we have no position” on democracy.
Cheap labour I pressed her on how the White House planned to deal with, for example, Vietnam – a country where children as young as 14 are forced to work 12-hour days, and where there is no right to free speech, no right to protest, no right to strike, and no freedom of association. “Oh, you can have labour rights without democracy,” Weisel insisted. She demurred when
asked to name an example. In reality, the one thing that non-democratic regimes can never tolerate is independent workers’ organisations. That is why trade unionists were the first through the gates of Dachau, and why Poland’s Solidarity movement posed an existential threat to Communist power throughout the former Soviet bloc. Indeed, part of international investors’ attraction to countries like Vietnam and China is not simply that wages are low, but that the absence of democratic rights promises to lock in cheap labour for years to come. For example, when China revised its labour law in 2008, Apple Inc, Hewlett-Packard Co, and other members of the U.S.-China Business Council lobbied successfully to limit the expansion of Chinese workers’ rights. While China is not a party to the current negotiations, the TPP is designed to allow additional countries to sign on in the future – and the Chinese, we can assume, will be courted assiduously. Former U.S. Trade Representative Ron Kirk, for one, noted that he “would love nothing more” than to see China join the treaty.
International profits But the TPP is not really a “trade” treaty at all. Rather, it is a vehicle for corporate lobbyists to achieve what they have been unable to persuade legislators to support through normal means. For example, pharmaceutical companies have insisted that the TPP force all countries to grant 12-year patents on prescription drugs – increasing their profits while delaying competition from cheaper generic versions. Likewise, tobacco companies are seeking to use the TPP to prohibit developing countries – which represent the largest cigarette markets – from adopting new controls on
The TPP… almost certainly constitutes the single biggest threat to the preservation – or creation – of any signatory country’s middle class
their products. The TPP’s most controversial provision, if adopted, would allow private corporations to sue foreign governments for adopting policies that adversely affect their expected profits. For example, if Vietnam were to mandate six weeks of paid maternity leave for all employees, a foreign factory owner might sue the government, insisting that it either repeal the law or reimburse the company for the cost of providing this benefit. A private tribunal would hear cases and issue binding rulings, with no possibility of appeal to any court or other democratically accountable authority. This, then, is the future that the TPP holds out: a kind of Potemkin democracy, in which citizens are free to choose their flags and holidays but cannot afford to enact any laws that might reduce international investors’ profits. Workers’ wages in the U.S., Canada, Japan, Australia, New Zealand, and other developed countries would be inexorably competed down toward those of lower-wage trading
partners, while developingcountry workers would find it increasingly difficult – even in nominal democracies – to improve their standard of living.
Secret deal The TPP is being crafted in utmost secrecy, with even legislators unable to see the full text that is being negotiated, though corporate lobbyists have been treated as partners in the drafting process. This is not surprising: In the U.S., where almost five million manufacturing jobs have disappeared since the adoption of the North American Free Trade Agreement, and where real wages have stagnated, a majority of voters across the political spectrum are opposed to more such treaties. At least for the Obama administration, the rush to conclude the TPP negotiations is doubtless driven by the desire to close the deal well ahead of America’s midterm election in November. And that, too, is bad for democracy. Indeed, though the U.S. Constitution stipulates that the power to “regulate Commerce with foreign Nations” lies solely in the hands of Congress, the Obama administration is pressing legislators to approve socalled fast-track authority, under which they would have no say over either the TPP’s terms or the parties to it – or even the power to amend the treaty text in any way. As a political scientist, I am sometimes asked how it is possible for democracies to enact laws that run counter to the interests of the vast majority of voters. They do so, in part, by shunning any commitment to democracy itself. There is no clearer example of this than the TPP, which almost certainly constitutes the single biggest threat to the preservation – or creation – of any signatory country’s middle class. © Project Syndicate
16 16
January 22, 2014 April 19, 2013
Closing Civil servants to get pay rise in May
China can keep economy stable: Li
The Macau government intends to increase civil service pay by May to make up for inflation, a government source told Portuguese news agency Lusa. The annual rate of consumer price inflation was 5.5 percent last year, official data show. The person said the pay rise is not yet decided but “it will help reduce inflationary pressures”. The government increased civil service pay by 6.06 percent last year, slightly below the 6.11 percent average annual rise in prices the year before. The government in December announced that several subsidies paid to civil servants would be increased and linked to civil servants’ pay index in the future.
China is confident it can sustain stable economic growth this year, Premier Li Keqiang (pictured) was quoted as saying on state television yesterday. Mr Li’s comment follows data on Monday that showed China’s economy growing 7.7 percent for the whole of 2013, narrowly missing market predictions for growth to hit a 14-year low of 7.6 percent. Gains in factory output and investment spending moderated last month. Growth was 7.8 percent in the third quarter. “We are confident about keeping the economy stable and developing it healthily this year,” Mr Li was reported as saying at a meeting with foreign financial experts.
Serbia begins EU membership talks T
JPMorgan quits IPO amid princeling issue Concerns raised over employment of Tianhe chairman’s daughter
J
PMorgan Chase & Co has stopped working on a Chinese firm’s initial public offering amid an investigation by U.S. authorities into its hiring practises in China, people with direct knowledge of the matter said yesterday. It is the second time JPMorgan has stepped aside from a Chinese IPO candidate while U.S. securities regulators look into whether the bank violated federal laws in hiring the relatives of current or potential clients with the sole purpose of winning business from them. JPMorgan has ended its IPO discussions with Tianhe Chemicals Group, the people said, as the supplier of lubricating oil additives to refiners was trying to move ahead with an about US$1 billion deal. Thomson Reuters publication IFR said on Monday that Tianhe Chemicals hoped to launch the IPO in the second quarter of this year.
JPMorgan’s exit was driven by concerns raised about the bank’s employment of Joyce Wei, the daughter of Tianhe Chemicals chairman Qi Wei, IFR reported, citing sources. Hong Kong securities licence filings show that a Jiao Wei worked at JPMorgan from January 2012 to August 2013, and is now on the staff at UBS AG, joining the Swiss bank in October. Jiao is Joyce Wei’s Chinese name, a person familiar with the matter told IFR, affirming also that she is Mr Wei’s daughter. Another source said UBS is mandated to work on the Tianhe Chemicals IPO. JPMorgan and UBS declined to comment. Efforts to reach Joyce Wei and Tianhe Chemicals were not successful. JPMorgan had been discussing an overseas listing with privately-owned Tianhe since at least 2011, when IFR
first reported the company planned to list in London. It is not clear whether Tianhe signed any formal letter of engagement before or after Ms Wei joined JPMorgan. One source said yesterday the company – in which Morgan Stanley’s Asia private equity unit invested US$300 million for a minority stake in 2012 – planned to list in Hong Kong. The U.S. Securities and Exchange Commission (SEC) and the Department of Justice are investigating whether JPMorgan violated bribery laws by improperly hiring the relatives of well-connected Chinese officials. The investigation is ongoing and the bank has not been accused of any wrongdoing related to the case. JPMorgan earlier withdrew from a syndicate of underwriters working on a US$3 billion listing by China Everbright Bank Co, Reuters reported in November. Reuters
he European Union began entry talks with Serbia, demanding the instigator of the continent’s bloodiest conflicts since World War II normalise ties with Kosovo and improve its norms on justice and civil liberties. The Balkan state of 7.2 million people wants to be the third former Yugoslav republic in the 28-member EU, with the goal of finishing 35 negotiating areas, or chapters, by 2018 and joining by 2020. Neighbouring Croatia, which entered the EU in July 2013, took eight years. “Starting negotiations means entering into a very demanding phase,” said EU Enlargement Commissioner Stefan Fule at a Brussels briefing yesterday with Serbia’s two top leaders. “Hard work will be needed and many challenges lie ahead.” To start talks, Serbia had to overcome the isolation triggered by the collapse of Yugoslavia under strongman Slobodan Milosevic. It also had to drop resistance to EU demands to give up suspected war criminals, renounce claims on the former province of Kosovo and bring its courts, economy, and approach to personal freedoms in line with EU norms. Serbia is also struggling to emerge from the effects of two recessions since 2009. Membership may also raise living standards that have languished at about a third of the EU average and attract more foreign investment that can boost growth and create jobs in a country where almost a quarter of the workforce is unemployed. “Challenges are ahead of us, difficulties are ahead of us, but we are ready,” Serbian Deputy Prime Minister Aleksandar Vucic said at the news conference. “I’m convinced we can do it. We can do everything by 2018. Then it will be up to you gentlemen, up to the climate in Europe, whether you are ready to admit Serbia by 2020.” Serbian PM Ivica Dacic said the EU “is not only the goal, but also the means by which we will modernise our system”. Bloomberg News